PJC Business

F RAUD AND N EGLIGENT M ISREPRESENTATION

PJC 105.4

PJC 105.4

Instruction on Common-Law Fraud—Failure to Disclose When There Is Duty to Disclose

Fraud occurs when— 1. a party fails to disclose a material fact within the knowledge of that party, and 2. the party knows that the other party is ignorant of the fact and does not have an equal opportunity to discover the truth, and 3. the party intends to induce the other party to take some action by failing to disclose the fact, and 4. the other party suffers injury as a result of acting without knowl edge of the undisclosed fact. COMMENT When to use. PJC 105.4 should accompany PJC 105.1 if the court finds that there is a duty to disclose. Source of instruction. PJC 105.4 is based on the elements of fraud by nondisclo sure set forth in Bombardier Aerospace Corp. v. SPEP Aircraft Holdings, LLC , 572 S.W.3d 213, 219 (Tex. 2019); Bradford v. Vento , 48 S.W.3d 749, 754–55 (Tex. 2001). Instruction 4 submits the reliance element of fraud. See Schlumberger Technology Corp. v. Swanson , 959 S.W.2d 171, 181–82 (Tex. 1997); Custom Leasing, Inc. v. Texas Bank & Trust Co. , 516 S.W.2d 138, 143 (Tex. 1974). Silence as misrepresentation. “As a general rule, a failure to disclose informa tion does not constitute fraud unless there is a duty to disclose the information.” Mer cedes-Benz USA, LLC v. Carduco, Inc. , 583 S.W.3d 553, 562 (Tex. 2019) (citing Bradford , 48 S.W.3d at 755). “Whether such a duty exists is a question of law.” Car duco, Inc. , 583 S.W.3d at 562 (citing Bradford , 48 S.W.3d at 755). The supreme court has concluded that a duty to disclose arises when there is a confidential or fiduciary relationship. Insurance Co. of North America v. Morris , 981 S.W.2d 667, 674–75 (Tex. 1998). The court has also held that a duty to disclose arises in other circumstances. See Spoljaric v. Percival Tours, Inc. , 708 S.W.2d 432, 435 (Tex. 1986) (specific represen tations about bonus plan gave rise to duty to disclose adoption of an alternate plan); Smith v. National Resort Communities, Inc. , 585 S.W.2d 655, 658 (Tex. 1979) (seller of real estate has duty to disclose material facts not reasonably discoverable by pur chaser). Courts of appeals have concluded that a duty to disclose may arise when (1) there is a special or fiduciary relationship, (2) a person voluntarily discloses partial informa-

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